Vat Increase: Businesses In Lagos To Pay 12.2 Per Cent On Goods, Services

Businesses in Lagos will pay 12.2 per cent on the sale of goods and services once the 7.2 per cent Value Added Tax increase comes into force.

An analyst with Afrinvest, Adedayo Bakare, pointed this to SaharaReporters on Wednesday during a chat.

The Lagos State Government had since collected tax from restaurants and other retailers under a sales tax law despite a Supreme Court ruling against such in September 2018.

Bakare while speaking with SaharaReporters, said, “In Lagos, consumption tax is already 10 per cent because Lagos State charges five per cent VAT and there is also another consumption tax of five per cent.

Citing the data on VAT collection given by Nigeria’s former Finance Minister, Kemi Adeosun, in 2018, Bakare said only about four states were generating most of the VAT, adding that the tax burden on just a few is disproportionate.

“Meanwhile, when they generate all these money, they will share it between 36 states when most of the money is generated in just four states.”

While admitting that the hike in VAT was not wrong, Bakare said there was a more urgent need to keep widening the tax net.

He added, “It is important that they widen the tax net to bring more informal businesses to the formal sector.”

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FG reveals what banks will do to accounts of tax defaulters

Federal Government has given a 30-day window to high profile tax defaulters to regularise their tax status with the Federal Inland Revenue Service (FIRS), failing which they risk forfeiting the tax equivalent directly from their bank accounts to the Federal Government

The FIRS Executive Chairman, Tunde Fowler, dropped the hint on Thursday when he appeared as a guest on the Nigerian Television Authority (NTA) programme – Platform.

He said that banks have been instructed to “sweep the accounts of tax defaulters into the Federation Account after 30 days.”

According to Fowler, bank accounts of the identified defaulters have been put on lien.

The FIRS boss noted that since the bank lien on tax defaulters’ accounts was initiated 60 days ago, the Service has granted an additional 30 days – making it 90 days – for the defaulters to regularise their tax status.

He said the FIRS has written 23,000 letters to high-profile tax defaulters, whose names appeared on its list of defaulters.

Some of the letters, he said, have not been delivered because the addresses of the defaulters may have changed.

“The FIRS is determined because the Service is backed by law to sweep the equivalent of what such tax defaulters owe into the federation account.

“At the end of the 90 days, banks will be asked to sweep the tax owed into the Federation Account,” he warned.

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Facebook has been warned that it will not be allowed to launch its planned digital currency in Europe so long as concerns remain that it could destabilise the global financial market.

The social media giant announced plans for its own cryptocurrency – Libra – earlier this summer, and said it would be used alongside a smartphone-based wallet app called Calibra before the middle of 2020.

French finance minister Bruno Le Maire has said the cryptocurrency will be barred from operating in Europe until worries about sovereignty, financial risks and potential market dominance are quelled.

Libra will arrive as part of a smartphone-based wallet app called CalibraSpeaking at a meeting of the Organisation for Economic Co-operation and Development in Paris, he said consumers and companies alike would be put at risk.

Mr Le Maire added: “This eventual privatisation of money contains risks of abuse of dominant position, risks to sovereignty, and risks for consumers and for companies.

“Libra represents a systemic risk from the moment when you have two billion users. Any breakdown in the functioning of this currency, in the management of its reserves, could create considerable financial disruption.”

Mr Le Maire did not spell out how France would be able to prevent Libra being rolled out in other European countries, including members of the European Union.

Nations aside from France have already cast doubt on Libra, with Switzerland having said earlier this week that the proposed payment system should face strict rules typically reserved for banks.

Bank of England Governor Mark Carney was among those who suggested Libra would face strict regulation, and the UK data watchdog has also raised privacy fears over how customer details would be protected.

Facebook has attempted to downplay the initial ambition of Libra, saying that at launch it will only allow payments between users via smartphones or other devices.

However, the currency will be open source – meaning it can be included in other and existing digital wallets.

UK Information Commissioner Elizabeth Denham has warned that Libra “must work in tandem with people’s privacy expectations and rights”, with Facebook having suffered major damage to its reputation since the Cambridge Analytica data scandal emerged last year.

There was global outrage when it emerged the political consultancy firm had harvested the data of millions of Facebook profiles without consent – and used it for political advertising.

Facebook said 87 million users were affected and it was hit with a £500,000 fine in the UK for “serious breaches of data protection law” by failing to safeguard the personal information of its users.